The UK Strategy for Financial Wellbeing - 2020-2030 Five ambitious changes to help people make the most of their money and pensions - The Money ...
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
The UK Strategy for
Financial Wellbeing
2020–2030
Five ambitious changes to help
people make the most of their
money and pensions
The UK Strategy for Financial Wellbeing on a page
See
pages
We believe: A financially healthy nation is good for individuals, communities, business and the economy 4–6,
9–10
Our vision: Everyone making the most of their money and pensions
See
pages
Our shared Agendas for Change– the five ways we will drive change at scale, working with others 14–33
Financial Nation Credit Better Future
Foundations of Savers Counts Debt Advice Focus
Children, young people Working-age ‘struggling’ People who often use People All adults
2030 Who and their parents and ‘squeezed’ people credit for food and bills who need debt advice
National
National Goal National Goal National Goal National Goal National Goal
Goals
2m more 2m more 2m fewer 2m more 5m more
We encourage Goal children and young people working-age ‘struggling’ people often using credit people accessing debt people understanding
organisations getting a meaningful and ‘squeezed’ people for food & bills. advice. enough to plan for,
of all sizes and financial education. saving regularly. and in, later life.
from all sectors
to help deliver People will access and
these goals Children and young people People will get the savings More people will access People will engage
will get a meaningful habit, build cash reserves affordable credit, and receive high quality debt with their future and be
financial education so that to help with short-term more people will make advice when they need it, empowered to make
informed choices about because of stronger and informed decisions for,
Outcome they become adults able emergencies and have
earlier engagement, and
to make the most of their a clearer future focus in borrowing. and in, later life.
See
money and pensions. their financial lives. because funding, supply
page 11 and services more closely
match need.
Cross-cutting lens: gender See
pages
34–36
Cross-cutting lens: mental health
Activation MaPS Toolkit to
period support partners
See Northern Ireland Scotland Wales England
page 13 delivery plan delivery plan delivery plan delivery plan
Notes
Statistical notes and definitions start on page 42, including an important note about the goal for ‘Future Focus’ 1
This strategy and the wider system
We believe that a financially healthy nation is good for individuals, communities, business and the economy.
A successful strategy will need to influence a wider system of regulations, products, services and culture.
d values in socie
ure an ty
C u lt
as a core purpose f
llbeing or i
nst
l we it u
c ia tio
n n c tioning market ns
n a Fu s
fi
an
to
Regulation
d
t
or
hif
ga
s
nis
et
ark
tion, guidanc
atio
ma e,
or
Am n f an
ns
i
d
ct
ad
du
vice
Pro
The UK Strategy for
Financial Wellbeing
The work of the UK Strategy for Financial Wellbeing must support the individual, but this can only take place within a wider system. The more effective the strategy
is at influencing the wider system, the more it can help individual people. For example, providers must design financial products so even those with low literacy and
numeracy skills can understand them. They should also tailor them to support people with unpredictable lives and incomes. That is why the Money and Pensions Notes
Service (MaPS) will involve regulators, financial services and other leaders, as well as voices for cultural change, in delivering this 10-year strategy. 2
Contents
The UK Strategy for Financial Wellbeing on a page1
Foreword4
How we have listened, and used evidence, to develop this strategy 7
What are the goals and outcomes of the strategy?
The benefits of a financially healthy nation9
Defining financial wellbeing: Five priority measures to focus the strategy10
The National Goals and the five financial wellbeing outcomes11
How will the strategy be delivered?
The activation period 13
Agenda for Change: Financial Foundations14
Agenda for Change: Nation of Savers18
Agenda for Change: Credit Counts 22
Agenda for Change: Better Debt Advice 26
Agenda for Change: Future Focus30
The cross-cutting lenses 34
MaPS and the UK Strategy: Helping everyone to focus on the same goals 37
MaPS and the UK Strategy: MaPS delivery 38
MaPS and the UK Strategy: Toolkit support for multiple sectors 40
MaPS and the UK Strategy: Toolkit support for specific sectors 41
Notes and sources for all statistics 42
Notes
3
Joint foreword
Financial wellbeing is good for individuals, communities, business,
and the economy. But poor financial wellbeing, affecting tens
of millions of people, is holding the UK back.
11.5m people have less than £100 in savings to fall back on. 9m people
often borrow to buy food or pay for bills. 22m people say they don’t know
enough to plan for their retirement. And 5.3m children do not get a meaningful
financial education.
According to the Organisation for Economic Co-operation and Development,
figures like these place the UK well down the rankings of G20 countries,
behind France, Norway, China, Indonesia and many others.
The Money and Pensions Service has been tasked with coordinating
a national strategy to address the problem.
Thousands of organisations work to deliver financial education, help people
manage their money day-to-day, or offer support in a financial crisis. There has
long been a need for one body to agree a simple, clear set of common goals, and
provide an effective mechanism to focus everyone’s efforts. The 2018 law that
set up the Money and Pensions Service (MaPS) gave us this role. This strategy
sets out how we will deliver our strategic function.
When we came into existence on 1 January 2019 we decided it was important to
listen carefully to a wide range of views before we set out any National Goals or
plans. In April, we published a summary of the evidence we have about financial
wellbeing in the UK. We then set out to listen to what you had to say. We had
conversations with more than 1,000 leaders and frontline staff across the UK.
We received written submissions of remarkable detail and quality from 39 expert
organisations. We also made the most of expertise from staff and volunteers who
worked in our predecessor organisations.
This document now sets out the views of the MaPS Board about what it will
take to significantly improve financial wellbeing in the UK.
Notes
4
Two aligned strategies to guide MaPS
A common vision:
Everyone making the most of their money and pensions
We are building on the previous Financial Capability Strategy.
1. UK Strategy for Financial Wellbeing We are also making positive changes based on what we have
(2020–30) heard from the frontline.
The Money Advice Service published a Financial Capability Strategy for
the UK in 2015. It then began to build evidence, and talk to stakeholders
The National Goals to develop key themes. All the good work since 2015 has made its way
into this document, but we are now taking this further.
You told us to start with the customer, focus on outcomes, and set
clear goals. So we have set five key outcomes, each with a priority
measure and a 2030 National Goal.
You told us that MaPS would need to be 100% behind the strategy.
So we commit that the MaPS Corporate Strategy will be designed in
2. MaPS Corporate Strategy service of the five outcomes of the UK Strategy. Both strategies will
(2021–24) deliver on a single vision: everyone making the most of their money
and pensions (the diagram on the left shows how they fit together).
The work The work You told us to prioritise. We strongly agree that even at the level of
of many of many a 10-year national strategy, success will only come if we all focus.
organisations organisations So we have set out which customer outcomes are priority areas for
beyond beyond this strategy, and explained which are not.
MaPS will MaPS will
MaPS activity supporting the National Goals You told us it wasn’t clear what the previous strategy asked partners
also support also support
to do, or what support they could count on. So we have set out a new
the National the National
‘Agendas for Change’ approach, with a ‘toolkit’: a collection of support
Goals Goals
services, guidance, evidence and materials for partners to use.
You told us governance and accountability were unclear under the
previous strategy, and that they did not address the needs of all four
MaPS targets and performance indicators nations in the UK. So we have set out a new governance structure
that clearly identifies the MaPS Board as accountable for the
strategy. There will be delivery plans for all four nations.
We have called this new strategy The UK Strategy for Financial Wellbeing.
This document, the UK Strategy for Financial Wellbeing, sets out the goals we believe We think the easily understood word wellbeing will help us to draw in
all organisations should work on between 2020 and 2030. Our forthcoming Corporate a wide range of public, private and voluntary sector partners.
Strategy will detail the work MaPS will do both to coordinate the UK Strategy and to
combine, improve and deliver guidance and advice services.
For 2020/21 we will have an interim corporate plan. This will be a stepping-stone to
the full delivery of the UK Strategy.
Notes
5
This strategy fits into a wider system of regulations, products, services and The activation period after the publication of this strategy will be a critical period
culture. It can only be fully effective if the system better supports individuals. to build momentum, and will shape the MaPS Corporate Strategy.
We are clear about our focus on helping people to be more confident and Directly after publishing this strategy, we have important work to do with you.
empowered when it comes to money. But we do not believe that the only key We want to establish delivery plans for each of the five outcomes of the strategy
to a financially healthy nation is individuals making better financial decisions. and for each of the four nations of the UK. At the same time, we will be thinking
We argue for a balanced approach. As well as financial education supported by about how to transform MaPS into the organisation you need, one that can
all, we need ethical firms, a compatible regulatory framework, and empowered enable and support ambitious work from hundreds of organisations over the next
and capable consumers. decade. We will publish our three-year Corporate Strategy about a year from now.
It will respond to the investment priorities you shape. And it will set out how our
In our view, building consumers’ financial responsibility and financial wellbeing guidance services will also be transformed to support the five outcomes.
should be a strategic goal for the financial services sector.
Thank you for the remarkable support you have shown during the formulation
This will mean financial services embracing a change in corporate purpose of this strategy. We both look forward to deep working relationships with you
and culture to focus on individual financial wellbeing. Resources will need to that we believe can – and will – transform financial wellbeing in the UK over
be rebalanced from crisis support to prevention. Consumers will need simple, the next ten years.
affordable products and the required information to make better decisions.
In short, we believe system changes are just as important as building
people’s individual capability. They are key to the success of this strategy.
Changing products, services and regulations can all improve the fundamentals
of financial wellbeing.
Sir Hector Sants Caroline Siarkiewicz
Chair of the Money and Pensions Service Acting CEO of the Money and Pensions Service
Notes
6
How we have listened, and used evidence,
to develop this strategy
The UK Strategy for
Financial Wellbeing
Source Evidence reviewed
Adult Financial Nearly 6,000 UK adults.
Capability Survey
(Building Blocks
We have worked hard to base our conclusions on robust evidence, and to harmonise
analysis)
FCA Financial Lives Nearly 13,000 UK adults.
Savings Evidence ~50 pieces of evidence (both
different views in the choices we set out in this strategy.
Review internationally and in the UK– adult survey
& Savings Thematic data, large-scale public datasets and
Review qualitative research).
Children and Young 2016: nearly 5,000 UK children aged 4–17.
People Financial For each child interviewed, a parent or carer
Capability Survey was also interviewed. We made sure we understood We reflected on lessons learned. We spoke with UK and devolved We reviewed what the law says We listened to 1,000+
2019: nearly 4,000 UK children aged 7–17. people’s real needs and problems. We published lessons learned Governments about what is about our duties and functions. stakeholders to hear what
For each child interviewed a parent or carer
was also interviewed (findings available later We brought together data and from the previous financial important to them. We reviewed and took full they think is important.
during 2019). evidence on what consumers capability strategy and reviewed We met regularly with our sponsor account of the statutory duties We consulted with leaders,
need from the three previous it with people who were involved department DWP and its close given to MaPS, as well as other people from different
British Cohort Survey Nearly 17,000 GB adults.
Analysis (longitudinal organisations, our Evidence Hub throughout. partner HM Treasury to understand legal duties such as the Public sectors, frontline staff and
survey) and international sources. their policy positions on key matters. Sector Equality Duty. experts up and down the UK.
Talk, Learn, Do Process evaluation: 10 stakeholders, 15
We had similar conversations Read the full analysis in our
practitioners, 20 parents. with DfE, the Government separate listening report.
Impact evaluation: 238 parents (138 TLD Equalities Office and the devolved
group/100 control group). governments.
What Works Fund Nearly 37,000 UK adults accessing 65
projects across the UK; £11.3 million invested
in grants over two years.
From their insight and operational data ...
Annual Debt Advice ~20,000 in 2018, ~10,000 in 2019 (UK adults
Need survey 18+). The Pensions Advisory
Retirement Planning ~60 pieces of evidence from across the UK Service contributed to our
Evidence Review (qualitative research studies, large-scale evidence base. 10 ‘deep dive’ sessions Stakeholder 1-2-1s 39 written Listening events
datasets, consumer surveys, research
undertaken to test interventions and
These sessions gathered experts on special topics: We met with submissions We held events in:
prototypes). Pension Wise contributed public, private and We received and
Lessons learned Employers Belfast
to our evidence base. voluntary sector analysed more
Review by the ~50 pieces of evidence (qualitative and
Retirement Planning quantitative researches).
Debt advice Retail banking leaders. than 600 pages of Birmingham
Steering Group funding evidence submitted
The Money Advice Financial Bristol
by stakeholder
Wealth & Assets Survey Nearly 20,000 GB households. Service contributed to our Pensions education
organisations. Cardiff
Studies in Australia, Norway ~2,000 adults; Ireland ~1,500 adults; evidence base. Vulnerability Women’s finances
Canada, Ireland, Norway Canada ~2,000 adults; New Zealand and Dartford
and New Zealand Australia ~5,000 adults. Credit unions Game-changing
Edinburgh
ideas
Credit Thematic Review 28 pieces of UK evidence, including
Credit rules-of-thumb evidence reviews, nationally representative Leeds
adult surveys and research undertaken to
London
test interventions, and ~1,100 UK adults
aged 18–24. We consulted with our people.
Manchester
We received written inputs from around 80 MaPS colleagues
and held open consultation sessions with many more. Peterborough
Notes
7
What are the goals
of the Strategy?
This section sets out how we reached conclusions about measures, priority groups
and National Goals for the Strategy.
Financial wellbeing Five priority National Goals
definition measures and outcomes
We propose a simple definition of financial wellbeing. To bring this to life, and give focus, we have
prioritised five wellbeing measures for the strategy to both track and change. Taking population
surveys and other data, we have worked out who most needs help for each measure. Finally, we
have debated and now propose five headline National Goals, one against each measure. These
goals then drive towards the outcomes the strategy is aiming to achieve. Notes
8
A financially healthy nation is good for individuals,
communities, business and the economy
People who experience individual financial wellbeing are less stressed about money.
This in turn has positive effects on their health, relationships and work.
Financial wellbeing is good for communities. Financial stress – and its knock-on effects
for mental health, relationship breakdown and physical health – creates costs for
hospitals and others to repair broken lives. For example, avoiding an episode of adverse
mental health saves £600–800 per person, depending on the condition.
Employers also benefit from financial wellbeing. People who enjoy good financial
wellbeing are more productive at work. If they are not, employers suffer too. According to
a 2014 survey by Barclays, the lost productivity could impact businesses’ bottom line by
as much as 4%. And in 2016, the UK economy lost £120.7bn and 17.5m hours to financial
stress. In 2018, 11% of UK workers reported they had experienced a fall in productivity at
some point over the preceding three years as a result of their personal financial situation.
Financial wellbeing is about feeling secure and in control. It is knowing that you
can pay the bills today, can deal with the unexpected, and are on track for a healthy
financial future. In short: confident and empowered.
MaPS financial wellbeing definition
Businesses also benefit. If people don’t fall behind with bills and payments, businesses
have healthier profits and cashflow, and don’t need to write off debts. And people who
have financial wellbeing will spend in a way that is sustainable.
The wider economy also benefits from the future focus of people who enjoy financial
wellbeing. When people are able to set aside money towards their future, if it is saved in
a cash account, it can be lent to businesses, and if it is invested, it boosts the productive
parts of the economy. Private pension wealth identified in the last Household Wealth and
Assets Survey was £5.4 trillion, or 42% of the then household wealth of the UK. Of that
pension wealth, 69% was invested in the UK and 31% abroad. So even a small change
in future focus could add hundreds of billions to wealth invested in economically
productive assets across the UK. And as people spend sustainably in their retirement,
this is positive for them and the community in which they live.
Over the period 2020–2030, a key role for MaPS will be to widen the range
of leaders committed to improving financial wellbeing in public, private and
voluntary sector organisations.
This strategy sets out where we recommend the focus of their efforts should be.
Notes
9Defining financial wellbeing:
five priority measures to focus the strategy
We define financial wellbeing as follows. Financial wellbeing is about feeling secure and in control. It is knowing that you can pay the bills today,
can deal with the unexpected, and are on track for a healthy financial future. In short: confident and empowered.
But how can this be measured and where should the UK Strategy prioritise? We used the data we have about thousands of people across the UK to answer these
questions, so that the strategy has a clear, measurable and memorable focus.
The brief was that the five measures should capture whether everyone is To help us interpret the data in these large surveys, we also looked at smaller,
targeting the fundamentals of financial wellbeing and changing it for the better. more qualitative pieces of research into particular themes. These themes
We began by looking at very large surveys: the financial capability surveys included savings, financial confidence, and parents and their attitudes to
of adults in 2015 and 2018, of children and their parents in 2016 and 2019, money. Lastly, we looked at evidence of what works to change financial
and our debt survey of 2019. We were looking for behaviours that had strong wellbeing. This came from our Evidence Hub, which contains more than 300
statistical links with financial wellbeing. of the most significant pieces of evidence worldwide.
Foundations Day-to-day Looking ahead
Getting a meaningful Making good decisions
Measure Saving regularly Managing credit Accessing debt advice
financial education about future wellbeing
From our children, young There is widespread agreement The trade-offs associated Most people in the UK are not Saving and putting aside
people and parents research that saving is a good thing. with credit are sufficiently over-indebted, but the problem money for later life are similar
we are certain that we need There is also compelling distinctive for it to need its still affects many millions of behaviours, but people can
to understand children’s evidence that people who have own measure, although it people and there is a large gap approach these tasks with
experiences both in school a savings habit are more likely does have clear links to between those who need debt different mindsets. They need
and at home. So our measure to display other behaviours decisions people make about advice and those who get it. to be measured separately. We
covers children who get that we associate with financial savings. Our chosen measure A more supportive and easier- have considered, and ruled out,
the benefit of a meaningful wellbeing, regardless of the is about not using credit for to-access debt advice system measures of how much people
financial education in either a amount they save. The savings everyday essentials. can help people to resolve debt have saved. These are very
school or home environment. habit both increases resilience problems earlier. hard to gather. It is even harder
and increases the ‘future focus’ to judge what is the ‘right’
of savers. amount for an individual.
These five measures have been prioritised from a longer list of 21. We believe that focus is very important. We also recognise that prioritisation should be open to challenge, and should be updated
in the light of new data. So we will keep all the priority areas for the strategy under review, and formally review the strategy in 2023.
As a notable example, we reviewed whether one of the five key measures should be about whether people have insurance or life assurance products. It is important for most people to have one or
more from a range of these products (for example pet insurance, travel insurance, contents insurance, life assurance, to name just a few). But it is also very difficult to generalise (and then measure)
which are the right products for individuals to hold. Doing this means going into particular circumstances for each person surveyed. And even if a single measure could be found, we do not believe
that focusing everyone’s attention on it would have as great an impact on financial wellbeing as focusing on the five measures identified above. It is important to note, however, that although we
don’t think it should drive one of the five National Goals of the strategy, there is still a role for public financial guidance to provide answers to questions about insurance and life assurance products.
Our Corporate Strategy will set out our approach. Notes
10Setting National Goals, to deliver five financial wellbeing outcomes
We have set the ambition of the UK Strategy to deliver large-scale change, over a 10-year period, to achieve five outcomes, for those we have
identified as most in need. We believe a high level of ambition will stimulate creative solutions and inspire visionary leaders from different
sectors, organised under five ‘Agendas for Change.’
We propose goals that deliberately go beyond what we can foresee taking The National Goals will be affected by what happens in the wider economy and
place in the next two to three years, to produce important outcomes. This is a demographics. They will also interact with each other. For example, success
challenging stretch for ourselves and the wider sector to consider. Such goals in the first three goals should cut the need for debt advice, a component of the
cannot be achieved simply by the Money and Pensions Service funding more fourth goal. We have not tried to build a complex macro-economic model to make
delivery. They can only be met by new solutions and new collaborations between precise 10-year forecasts. However, we are confident that the goals are large
organisations. We also need the work of everyone involved in the strategy to enough for their effects to be measured through general population surveys.
stimulate much more investment in financial wellbeing. Progress can be tracked and will be visible by 2030.
Agenda for
Change Financial Foundations Nation of Savers Credit Counts Better Debt Advice Future Focus
Most in Children, young people Working-age ‘struggling’ People who often use People who need
All adults
need and their parents and ‘squeezed’ people credit for food and bills debt advice
Measure
and 48% =
receive a
4.8m
children
57% =
save regularly
14.7m
adults
17% =
borrow for food
9m
adults
32% =
have accessed
1.7m
adults
45% = 23.6m
say they understand adults
baseline
meaningful and young or bills the debt advice enough to plan for
financial education people they need later life
The National Goal National Goal National Goal National Goal National Goal
National
Goals 2m more 2m more 2m fewer 2m more 5m more
children and young people working-age ‘struggling’ people often using credit people accessing debt people understanding
getting a meaningful and ‘squeezed’ people for food & bills by advice in enough to plan for,
financial education by saving regularly by and in, later life by
2030 2030 2030 2030 2030
Outcome People will access and receive
Children and young people People will get the savings
high quality debt advice
will get a meaningful habit, build cash reserves More people will access People will engage with their
when they need it, because
financial education so that to help with short-term affordable credit, and more future and be empowered
of stronger and earlier
they become adults able emergencies and have a people will make informed to make informed decisions
engagement, and because
to make the most of their clearer future focus in their choices about borrowing. for, and in, later life.
funding, supply and services
money and pensions. financial lives.
more closely match need.
During the activation period:
Challenge groups will consider the goals and propose milestones along the 10-year journey that will measure progress. Notes
11
Individual goals, consistent with the National Goals, will be set for Northern Ireland, Scotland, Wales and England.How will the
strategy be
delivered?
This section sets out how we will make change happen.
Mobilising others
Activation Agendas Cross-cutting Toolkit: Toolkit:
period for change lenses MaPS delivery
multi-sector sector-specific
In the first few months after publishing the strategy, we will run an activation period. During this time, we will co-create delivery
plans with stakeholders to drive the outcomes.
We propose to mobilise partner organisations through what we call ‘Agendas for Change’. These will be multi-year programmes.
They will deliver the outcomes through a range of approaches, each of which will have multiple access points for partner
organisations, both large and small. Each Agenda for Change will help organisations to deliver their own aims as well as the
National Goals. Agendas for Change will be adapted to delivery circumstances in the four nations.
In addition to the ‘Agendas for Change’ approach, we set out in this section how governance will work. We detail how MaPS’ spend
will support the strategy. And we introduce our plans for a toolkit to assist organisations across the voluntary, public and private
sectors as they contribute to the strategy.
Notes
12The activation period
Over the first half of 2020, we will work with leaders and experts from across the public, private and voluntary sectors. Together, we will set out
clear, ambitious plans for how we can deliver the five measures and outcomes. What stakeholders say will then help shape MaPS’ Corporate
Strategy for the following three years.
From early 2020 By end June 2020 Autumn 2020
Each group will run to a timeline of 100 working days
Northern Ireland, Scotland, Wales delivery plans Reports
UK Strategy
England
delivery plan
Devolved governments
subcommittee
Initial challenge groups for Agendas for Change Reports UK Strategy
Northern
Ireland delivery
plan
Launched at MaPS
MaPs Board a conference Corporate
Strategy
Gender, mental health: recommendations Reports 2021–2024
UK Strategy
Scotland
delivery plan
Present findings
to ministers
England delivery plan Report
Review by MaPs Board UK Strategy
advisory groups Wales delivery
plan
Delivery by partner organisations and MaPS
Notes
13Agenda for Change: Financial Foundations
The National Goal
2020 2030
4.8m 6.8m
children children
and young What will be the outcome from and young
people this Agenda for Change? people
Children and young people
will get a meaningful financial
education so that they become
adults able to make the most of
their money and pensions.
How we will measure improved financial wellbeing
In a regular children and young people survey we will measure the
percentage of children and young people who say:
they recall financial education at school they considered useful,
and/or that:
their parents gave them regular money, set rules about money and
gave them responsibility for spending decisions.
In our most recent survey 48% (4.8m) said yes to one or both
statements.
Our National Goal is for this to increase to 6.8m children and young
people by 2030.
Notes
14What will ‘Financial Foundations’ mean for children and their adult lives?
Experiences and learning about money when we’re young can have
a direct impact on the ability to manage money later in life. Children start
to learn vital money skills and habits between the ages of three and seven.
As young people develop into their teens, they benefit from being given
increasing responsibility for managing and making choices with money.
This way, they learn the skills they’ll need for living independently.
Too many young people are entering adulthood without being prepared
for the money-related realities that lie ahead. Fewer than three in ten
14- to 17-year-olds plan ahead for how they’ll buy things they need, and
one in ten 16- to 17-year-olds have no bank account at all. Of those who
have accounts, 30% have never deposited money.
Education about money makes a difference. We want to increase the
reach and impact of financial education in schools and homes. Parents,
carers and people working in youth and community settings all have
a role to play, especially to help those who lack role models or find it hard
to engage with formal learning.
Targeting the UK Strategy on children most in need
It’s important to note that the limitations of surveying mean we
can only survey the experiences of children between the ages of
seven and 17. But starting early is important, so we want 2m more
children between the ages of five and 17 to get a meaningful financial
education. In England, we expect to focus first on school leavers.
In Northern Ireland, Scotland and Wales, we may have different
initial priority age groups. We expect to develop debt advice services
to help some parents who express an interest in improving family
conversations about money, alongside getting their own finances
back on track.
Notes
15The changes we want to see
In schools and further education colleges: we want more teachers to
have the confidence, skills and knowledge to teach financial education.
We also want more schools and colleges to be able to deliver memorable
financial education, to different year groups, as part of a coherent ‘whole
school’ approach.
In homes: how parents show, teach and talk about money has a huge
influence on children. We want more children to get experience and
responsibility for managing money at home. This includes opportunities
for spending and budgeting (such as using a bank account). Every child
should receive or handle money regularly, even if only a small amount.
In the community: extra help is needed to make sure children in
more vulnerable circumstances get a meaningful financial education.
This means targeted support for children in care and leaving care,
young carers and disabled young people. We want to see leaders of
organisations that work closely with children and young people trained
and supported. They can then deliver effective financial education for
children and families.
Notes
16How change could happen at scale The activation period
We have three hypotheses about how change could be achieved at scale: We will bring together influential and relevant stakeholders
More investment in effective interventions. Delivery is not reaching and partners. They will be set the UK Strategy challenge of how to make
enough children and young people. And even promising services are sure that 2m more children and young people receive a meaningful
not always targeted at those most in need. Of the 10.1m children financial education.
and young people in the UK, we believe just under a third are reached They will also consider specific, short and medium-term
through any intervention at all. Through the UK Strategy, we will boost proposals such as:
funding from a range of sources into evidence-based approaches to Planning a new collaboration on financial education between
financial education. UK Finance and MaPS. Bringing together financial services firms
Scaling up well-designed solutions. Financial education can make an to develop shared priorities that secure high-quality learning about
impact and we have an increasingly detailed understanding of what money for all children and young people.
makes it successful. Over the next 10 years, we will develop these Developing a collaborative pocket money campaign to reach children
effective approaches so that they can be delivered and sustained and parents. Focusing on giving children and young people more
across the nations of the UK. This requires a supportive infrastructure responsibility for their money and opportunities to make
of networks, tools and frameworks. age-appropriate money decisions.
Financial education is better understood and valued in schools, How to further develop MaPS’ existing work on three ‘pathfinder’
among parents and carers, and in the wider community. This means projects that increase the scale of financial education. These are
going beyond raising awareness to communicating with, and engaging, building more evidence and experience where we know the biggest
educators, parents and community services. We need to connect impact can be made. They fill gaps in:
people to tools, resources and other practical sources of help. Through – provision for parents;
the UK Strategy, we will promote practical opportunities for children – teacher training; and
to learn more and gain valuable experience in managing money – – support for 16- to 17-year-olds.
including pocket money. And we will build evidence as we go.
Notes
17Agenda for Change: Nation of Savers
The National Goal
2020 2030
14.7m 16.7m
people What will be the outcome from people
this Agenda for Change?
People will get a savings
habit, build cash reserves
to help with short-term
emergencies, and have
a clearer future focus in
their financial lives.
How we will measure improved financial wellbeing
In our regular adult survey, we will measure the percentage of
working-age ‘struggling’ and ‘squeezed’ people who say they save
every month or most months.
In our most recent survey 57% (14.7m people) said they do this.
Our National Goal is for this to increase to 16.7m people by 2030.
Notes
18What will a ‘Nation of Savers’ mean for people?
All our evidence shows that a more widespread habit of regular saving
would be transformational for the nation’s financial wellbeing:
People will have some level of resilience for when a financial shock
hits them. Many of them will not need to seek debt advice who
otherwise would need to.
The shift in attitude needed for a savings focus will have other positive
effects on financial wellbeing. These include a sense of control and
a future focus about personal finances.
We recognise that credit and savings are often, but not always, closely
linked. So this Agenda for Change has close links with the next, ‘Credit
Counts’. It is also linked to ‘Future Focus’, although getting people to save
into very long-term products, such as pensions, requires a different set
of enablers and measurements.
We do not ignore the fact that for many people, insurance and life
assurance products are the only things that can protect them against
catastrophic, rather than small, risks. However, we still believe that the
overall call for a regular savings habit is the most important message.
Targeting the UK Strategy on people most in need
There are 11.1m working-age people in our ‘financially struggling’
and ‘financially squeezed’ target groups who don’t save regularly.
They have a mix of low-to-moderate incomes. Some claim benefits.
Among our target group, 14% have no savings at all, 12% have savings of
£1–£99, and 19% have savings of £100–£499.
Many of these people are juggling the challenges of a busy working life,
variable income, and a young family. This is precarious as 71% of adults
receive unexpected bills every year. The breakdown of a car or domestic
appliance could mean calling on costly, short-term credit. It could even tilt
people into a debt crisis.
Notes
19The changes we want to see
More people saving: success will be measured by people who save every
or most months.
Systems change: websites, apps and other systems that people use daily
need to change. We want it to be much easier to put money into savings, no
matter how small the amount, and for people to have to think twice about
taking it out.
Engagement: we want more people to engage with the future focus that
saving requires. We want them to be confident that saving is worthwhile
and secured by the financial system.
Cultural change: we want to change the national conversation, so saving
is seen as valuable and attractive. We also want to focus that conversation
on banked savings, rather than money-saving tips. Otherwise, money saved
tends to be spent on other items.
Notes
20How change could happen at scale The activation period
We have three hypotheses about how change could be achieved at scale: We will bring together influential and relevant stakeholders
A game-changing shift in the ease of saving (money in the bank) and partners who will be set the UK Strategy challenge of how to ensure
driven by automation, integration and technology. We believe that that 2m more ‘struggling’ and ‘squeezed’ people save regularly.
changes to systems could make significant differences to the rates of They will also consider specific, short and medium-term
saving by providing nudges and even auto-enrolment schemes. One of proposals such as:
the most significant areas is payroll savings. The ‘sidecar savings’ field Greatly increasing the scale and take-up of payroll
trial, funded by MaPS, the JPMorgan Chase Foundation and BlackRock, saving schemes. If employees opt to have their savings deducted
and being delivered by NEST Insight, is central to our thinking on from payroll at source, it is easy for them to get the habit. Although
automated savings. This concept of a savings buffer being built up by payroll deducted savings are available, take-up is low. We would like to
people auto-enrolled in pensions savings seems promising. If evidence explore proposals to bring this offer to hundreds of thousands more
demonstrates it has a positive impact on financial wellbeing, it could employees within two years.
be adopted voluntarily by employers. It could even be taken up as a
development in law and policy. This could bring about massive change Planning an impactful social campaign. What is the 10-year plan
that is easy and manageable for millions of working people. for changing the national conversation about savings in the media?
A sector-wide programme, including multiple forms of messaging
direct to consumers, could promote a savings habit and say why it is
valuable. This could occur at many levels. The rollout of the Standard
Financial Statement in debt advice, with its savings element, is a
good example. This is challenging the idea that people who are over-
indebted don’t have the capacity or will to get a savings habit. Over the
long-term in the national media, we want to persuade influencers to
start focusing on the habit and the value of banking savings rather than
spending them elsewhere.
Government initiatives have a significant role to play. Help to Save
is a major initiative for people on low incomes. Six million young adults
will inherit savings from the former Child Trust Funds over the next
seven years. Both provide infrastructure that can extend the reach
of a savings habit into new sections of the population.
Notes
21Agenda for Change: Credit Counts
The National Goal
2020 2030
9m 7m
people What will be the outcome from
people
this Agenda for Change?
More people will access
affordable credit, and more
people will make informed
choices about borrowing.
How we will measure improved financial wellbeing
In our regular adult survey we will measure the percentage of
people who say they often borrow to buy food or pay bills because
money has run out.
In our most recent survey 17% (9m people) said they do this.
Our National Goal is to cut this to 7m people by 2030, with
a significant proportion of these people paying less for the
credit they use.
Notes
22What will ‘Credit Counts’ mean for people’s lives?
Credit helps people balance their spending. But regularly using credit to
buy everyday essentials, such as food, or pay off other borrowing are clear
signs of lower financial wellbeing. Credit might be used because some
people have no other way to pay for these essentials, but others do have
choices. Overall, this issue affects 9m people.
In our vision for 2030, those who have no choice but to use credit
will pay less for that service. They will be able to cut the very high
repayment costs which add to their financial burden.
Where people have options, but are using credit more out of habit,
we would like to see them encouraged to engage with the true costs
of revolving credit. This will reduce their servicing costs and free
up disposable income that could be better used to improve their
financial wellbeing.
Targeting the UK Strategy on people most in need
There are 9m people who often use credit for everyday essentials
such as buying food or paying bills.
Of these, 1.8m in the ‘financially struggling’ segment will feel they
have no other options for everyday essentials. More affordable
credit will help them, even if it can’t address all their financial
wellbeing needs.
There are then 7.2m people, many in the ‘financially squeezed’
segment, who might benefit from becoming more aware of the
(often hidden) cost of credit. We are looking to help them engage
more with their borrowings, especially where their wellbeing could
then be improved.
Notes
23The changes we want to see
More low-cost credit: new forms of low-cost credit will be available in
the market, and existing forms will become more accessible.
Better tools to manage credit: consumer interfaces with credit will
become more focused on repayment, the total cost of credit, and
build in elements of savings and budgeting.
Informed and empowered consumers: consumers will be more
mindful about the pros and cons of credit and savvier shoppers
on price.
Creditors supporting borrowers more: a wider range of interventions
will take place at an earlier stage when bills and commitments
are missed.
Notes
24How change could happen at scale The activation period
We have four hypotheses about how change could be achieved at scale: We will bring together influential and relevant stakeholders
Regulation: the FCA has made a number of advances to protect and partners who will be set the UK Strategy challenge of how to ensure
consumers from harmful lending practices. We believe this work that 2m fewer adults use credit for everyday essentials.
should continue as we understand more about the lives of those in Fair4All Finance has been set up to increase the financial resilience and
vulnerable circumstances. wellbeing of those in vulnerable circumstances in England and Wales.
Product design: there is a great opportunity to use technological The initiative makes suitable, affordable financial products and services
advances to design products. These will better support the needs and readily available, with a focus on increasing access to affordable credit.
preferences of consumers and their choices and behaviours. They will Fair4All Finance are creating a sector Theory of Change with stakeholders.
help drive longer-term financial wellbeing. During the activation period, Fair4All Finance will develop a detailed action
plan with stakeholders to deliver the key outcomes identified. MaPS will
Awareness: customers could make better choices for their long-term support this initial exercise. We will look in particular at how awareness of
financial wellbeing if they were more aware of the different options. credit choices and suitable debt advice can be developed
Choices need to be presented more clearly, making decisions easier. to support the delivery of outcomes in the Theory of Change.
Availability: more availability of affordable credit choices would make Stakeholders will also consider specific, short and medium-term
a significant difference to the financial wellbeing of those in the most proposals such as:
vulnerable circumstances in society.
Personalised payment schedules in social housing. Can we build on
the Rentflex concept? (This is the proven principle of a personalised
schedule for social housing costs, offered alongside free financial
guidance.) Could we develop proposals for scaling it to hundreds of
thousands of tenants within two years? And how could the principle
be seeded into the private rented sector, student accommodation
marketplace, and other sectors, such as utilities and Council Tax,
that serve our target audience?
Notes
25Agenda for Change: Better Debt Advice
The National Goal
2020 2030
1.7m 3.7m
people What will be the outcome from people
this Agenda for Change?
People will access and receive
high quality debt advice when
they need it, because of stronger
and earlier engagement, and
because funding, supply and
services more closely
match need.
How we will measure improved financial wellbeing
In our most recent survey 1.7m people said they had received debt
advice, and we estimate (from the same survey) that a further 3.6m
people needed debt advice because they had been regularly missing
payments throughout the last six months.
Our National Goal is to see the number receiving the debt advice they
need increase by 2m.
Notes
26What will ‘Better Debt Advice’ mean for people’s lives?
9m adults are over-indebted, either missing payments or feeling like keeping up
with their bills is a heavy burden. Being over-indebted has a significant impact
on individuals’ mental health and overall wellbeing. Over-indebtedness also
has a significant impact on society as a whole. Within the 9m people, we have
concluded that 5.3m people need debt advice. Our vision is to make sure that
more of those who need debt advice get it. And wherever possible, we want to
cut the number of people that need debt advice in the first place.
However, capacity in the debt advice sector is severely limited. People seeking
debt advice often struggle to access it. By 2030, debt advice will be available to
2m more of those who need it. Building on the findings of the independent Wyman
Review, this will be achieved in three ways: through more effective use of a range
of channels; how we design services; and by making sure the debt advice funding
model is adequate, fair, sustainable and transparent.
Debt advice can be life-changing. But due to the increasing complexity of cases
and inconsistent quality, some people leave the debt advice process without a
suitable solution. They continue to miss bill and credit payments. Our vision is
that advice can increasingly resolve everyone’s problems quickly and effectively.
We also want to shift the culture in advice seeking, removing the taboo about
seeking help and getting more people into support earlier. The Breathing Space
scheme is the springboard to achieve this.
Targeting the UK Strategy on people most in need
Our latest figures show that 5.3m adults in the UK need debt advice. Around
half of those that need debt advice are younger (just 26% of the UK population
is aged 18–34, but 48% of the 5.3m are within that age group).
They are more likely to be struggling with their mental health, with 51% saying
they have had mental health problems within the last 3 years (21% in the whole
population). And they are more likely to have a disability (42% of those that
need debt advice, 27% across the UK).
Many of the 5.3m are working (75%), and within the 5.3m the majority have
lower household income (earning less than £20,000). They are much more
likely to be renting (33% in social rented accommodation and 20% in private
rented, compared to 14% and 13% across the UK population).
Notes
27The changes we want to see
Supply and demand will move closer together: delivering on the
direction set by the Wyman Review, debt advice will be available to
more of those who need it, underpinned by a fair and sustainable
funding model.
Quality of outcomes: everyone who seeks help will get high-quality
advice and there will be appropriate options for every person
advised, including those whose essential expenditure is higher than
their income. (MaPS heard the feedback from debt advisers that it
can be challenging to marry up high-quality advice and a drive for
higher volumes of people served. We intend to consider this further
in our Corporate Strategy and will set out our specific approach to
commissioning in due course.)
Earlier access: building on the Breathing Space scheme, getting help
with debt problems will become the norm, with more customers
seeking or being referred into appropriate support at an earlier stage.
Development and implementation of a sector-wide approach to
data, evidence and reporting: an approach will be implemented that
reduces duplication, enables a coherent understanding of impact, and
helps foster improvement at all stages of the client journey.
Progressive creditor practices: creditors will design products and
services in a way that reduces the likelihood of over-indebtedness
occurring in the first place. And it will become a norm for creditors
to make effective referrals to debt advice and engage collaboratively
with the debt advice process when people do fall into arrears.
Notes
28How change could happen at scale The activation period
We have two hypotheses about how change could be achieved at scale: We will bring together influential and relevant stakeholders
A new target operating model for the sector. This will follow the and partners who will be set the UK Strategy challenge of how to make
direction of travel in the Wyman Review and implement the target sure that 2m more adults can access debt advice.
operating model agreed with the sector in late 2018. We will achieve They will also consider specific, short and medium-term
this through sector-wide infrastructure and approaches. These will proposals such as:
include PACE (Piloting Adviser Capacity and Efficiency), the Breathing Developing a set of recommendations for a new funding model.
Space scheme and the move to a more sustainable long-term funding A joint Financial Conduct Authority/MaPS taskforce will produce a set
model. We also want to make sure that being a debt adviser continues of recommendations on a fairer and more sustainable funding model –
to be an appealing, aspirational profession. This means being able to seeking input from the sector throughout the process.
keep and recruit the required skills in the sector and provide adequate
training, development and good practice sharing. We know the key Setting out how we will deliver the new debt advice target operating
areas of focus for this Agenda for Change cannot deliver real change model, including establishing action plans for the elements of the
in isolation from each other. MaPS will seek to continue to coordinate a PACE model that haven’t yet been mobilised. Built and delivered in
coherent plan for delivery across the sector. collaboration with the debt advice and creditor sectors, the PACE
model will put the client at the heart of services.
We want fewer customers to need debt crisis support in the long run.
This requires: Working with HM Treasury and the Insolvency Service. We will
– shifting the negative culture around seeking advice to a positive one work together to ensure that the Debt Advice Agenda for Change
and delivering the preventative measures set out elsewhere aligns with Breathing Space and the Statutory Debt Repayment Plan.
in the strategy; Measuring the need for debt advice. This is a complex task, different
– enabling better-designed services, built around more rounded advice, from assessing supply or demand. Different measures and opinions
including enhanced money guidance and onward referrals from debt exist across the sector. We will undertake a major review of all
advice to help people deal with other underlying issues; and the available statistics and make recommendations to share
–promoting creditor good practice in supporting those at risk of, with the sector.
or experiencing, financial problems.
Notes
29Agenda for Change: Future Focus
The National Goal
2020 2030
23.6m 28.6m
people What will be the outcome from
people
this Agenda for Change?
People will engage with their
future and be empowered to
make informed decisions for
and in, later life.
How we will measure improved financial wellbeing
In our regular adult survey, we will measure the percentage
of all adults who say they know enough to make decisions for,
and in retirement and later life.
In our most recent survey 45% of people aged 18–64 said they
knew enough about pensions to make decisions for retirement –
the goal above is based on this percentage, applied to the whole
adult population, as we currently lack data for 65+ year-olds. This is
therefore an inference. To move from inference to a final figure, we
will survey people aged 65+ using a comparable measure and will
complete the measurement during the activation period.
Our National Goal is to raise the measure by 5m people by 2030.
Notes
30What will ‘Future Focus’ mean for people’s lives?
As people approach later life, they need to know how much they should be
saving into their pension and what options they have for accessing it. But
behavioural bias research shows that people live for today. They find it hard
to make trade-offs between spending now, saving for the short term, having
safety-net savings and planning for later life.
Automatic enrolment has successfully created millions of new pension
savers, through a passive approach. Pension freedoms now give more
options and flexibility. But to get the best out of them, people need to know
more and be confident making choices, so a shift from passive to active
engagement must take place. However, the language of pensions products
is still intricate and confusing, for even highly literate and numerate people.
In later life, a new set of challenges emerges, yet people bring similar
behavioural biases to these choices. Later life means preparing for difficult facts
and probabilities of later life: death, decline, making or updating a will or power
of attorney and funeral planning. People must take good decisions as some of
these later life issues arise. Addressing these issues requires a confident and
informed future focus, surrounded by a supportive system.
This Agenda for Change therefore needs to support people with information,
guidance, and nudges. They will assist those who can benefit from it to be
informed and confident consumers of regulated financial advice; make good
choices between present and future; and confidently navigate the products and
laws that can help them as they move through different stages. But we must
do so without rolling back any of the gains that auto-enrolment has achieved
through inertia.
Targeting the UK Strategy on people most in need
Of the 40m working-age people, 22m say they don’t know enough to plan their
retirement. We want all of these people to have the support they need to make
informed decisions for their retirement. Many say they don’t know enough:
66% of 18–24 year-olds;
64% of working-age women; and
48% of those approaching retirement age (55–64).
In addition, there are 12m people aged 65 and over, the fastest-growing
cohort of the population. Among them, 5.4m are aged 75 and over. They have
to grapple with managing their pension pot alongside other issues most
of them have not faced before.
In the early years of the strategy, the primary focus should be on people
aged between about 50 and 70. They are engaging with the implications
of pensions freedoms for their later-life decisions. Notes
31You can also read
